Fears over impact EU SMP stocks on global dairy prices being realized

Summary

There is growing international concern over the impact of accumulated EU skimmed milk powder (SMP) intervention stocks on global milk powder prices. Fears over future EU stock disposal plans, are weighing down global SMP prices. Given the extent to which SMP import prices act as a benchmark for local fresh milk prices, this is an issue of particular concern in ACP countries seeking to develop local milk-to-dairy supply chains. To avert the disruption of efforts in ACP countries to develop local milk-to-dairy supply chains the EU needs to tolerate the continued use of controls on all forms of milk powder imports in those countries where local milk supply development programmes are underway. Read more “Fears over impact EU SMP stocks on global dairy prices being realized”

Brexit and Trade Displacement: Areas of Concern for ACP Countries

Summary

An additional area of impact of Brexit which has to date been neglected when considering the consequences for ACP countries arising from the trade displacement. This would arise from two inter-related development: firstly the possible introduction of MFN tariffs on mutual EU27/UK trade in agro-food products; secondly the impact of new UK trade deals on the market position of EU27 suppliers on the UK market. Both of these developments could see export drives targeting ACP markets in the most seriously affected products, from sugar and dairy products to beef and poultry meat. Read more “Brexit and Trade Displacement: Areas of Concern for ACP Countries”

Report Paints Grim Picture for Prospects for Integrated Dairy Sector Development in Nigeria

Summary

The PwC report paints a pessimistic picture of the future prospects for the development of Nigerian milk production, given the serious constraints on the development of commercial milk production. There is a need to recognise that if multinational dairy companies are to effectively expand local milk sourcing this will need to be part of a sector wide approach involving all dairy industry players. If not all players are on board the differential use of milk powders in the production of dairy products will create competitive pressures which individual corporate efforts to expand local milk sourcing. This may well require the targeted use of trade policy tools to ensure discipline in support of any sector wide approach. However this could fall foul of EPA provisions prohibiting the use of such tools, should Nigeria sign on to the west Africa-EU EPA. Read more “Report Paints Grim Picture for Prospects for Integrated Dairy Sector Development in Nigeria”

EU Milk Production Responding Once More to Price Recovery, with Buoyant Exports

Summary

Efforts to curb EU milk production expansion through financial incentives for voluntary production reduction are held to have met with some success in promoting improvements in farm gate milk prices. However rising farm gate prices is now stimulating a renewed expansion of milk production. This is despite prices still being below farm production costs. The EMB continues to call for a comprehensive Market Responsibility Programme which includes mandatory production restraint.

EU exports of SMP and fat filled milk powders to ACP markets continue to grow, with WMP exports being sustained. Certain ACP markets are also being targeted for increased cheese and butter sales.

While ACP markets remain of marginal significance to overall EU dairy exports, for certain products and for countries these markets collectively are of growing significance. In addition it should be borne in mind it only requires a small volume of EU exports to have a disproportionate effect on individual African dairy markets.

ACP governments seeking to grow their own milk production, as part of integrated dairy sector development strategies, will need to closely monitor current EU export trends, including in fat filled milk powders. ACP governments may need to look at what trade measures can be set in place to sustain local dairy sector development efforts. Extending the product coverage of EU MMO analysis of trade flows to include fat filled milk powders could assist in this regard. Read more “EU Milk Production Responding Once More to Price Recovery, with Buoyant Exports”

Canadian dairy TRQ administration replicates earlier EC practices to consternation of EU Exporters

Summary

EU dairy exporters have complained Canada’s system for the allocation of the CETA cheese TRQ unfairly favours local manufacturers. The EU makes use of similar yet even more severe arrangements for TRQ administration in sensitive sectors, with under the EU-South Africa TDCA import licences being allocated only to ‘approved undertakings’ (EU dairy companies) on food safety grounds.  Important lessons in regard to how to ensure TRQ regulated imports under recently concluded EPAs do not undermine local producers can be learned from EU practices with regard to TRQ administration. These lessons could prove useful in ensuring that expanded imports from the EU in sensitive sectors do not undermine local agro-food sector development. Read more “Canadian dairy TRQ administration replicates earlier EC practices to consternation of EU Exporters”

DIT SACU Discussions to Extend Current Access to the UK Market More than a Technical Exercise

Summary
During the July 2017 visit of UK Secretary of State Lord Price to Southern Africa a commitment was made to replicating current market access arrangements post-Brexit. However it remains unclear how this to be achieved. The transitional extension of existing reciprocal preferences could not only face serious opposition from WTO members but would be far from a simple ‘technical exercise’. New rules of origin which took account of the UK’s departure from the EU agreement would be essential, in order to establish which products qualified for ‘originating status as UK products. The alternative would amount to an absence of rules or origin. Either would be a substantive modification of the existing terms of the UK’s export trade. The future of Tariff rate Quota (TRQ) arrangements under the EU agreement would also need to be resolved in the immediate post Brexit period. Looking to the longer term, there are a multiplicity of non-tariff issues related to post-Brexit UK trade and agricultural policies which give rise to profound uncertainties over the future value of any post Brexit preferential trade arrangement with the UK for certain SACU members. Many of these uncertainties will need to be addressed before the future value of a bilateral trade deal with the UK can be fully assessed. Read more “DIT SACU Discussions to Extend Current Access to the UK Market More than a Technical Exercise”

Role of UK Groceries Code Adjudicator could be extended

Summary

The UK GCA performance has been praised for gradually changing supermarket practices, with a debate now underway on whether the scope of the Groceries Supply Code of Practice (GSCOP) should be extended. Traidcraft has called for such an extension to address abuses which take place elsewhere in grocery supply chains served by developing country suppliers, who currently have no means of seeking redress. Strengthening the code to effectively cover all routes to market used by developing country suppliers is one important dimension of the current GCA review. A further important dimension is the important role which such regulatory initiatives can play in changing supermarket sourcing practices. This is an important issue given the growing role of foreign owned supermarkets across the ACP and the difficulties this poses for local agricultural producers in entering this expanding retail market component. Read more “Role of UK Groceries Code Adjudicator could be extended”

Agriculture to be a Focus of the Renewed Africa-EU Partnership

Summary
Supporting African agro-food sector development given its employment, food security and rural development effects is nominally a focus of the proposed renewed Africa-EU partnership. However differences of opinion over what constitutes an appropriate ‘regulatory and policy framework’ for African agro-food sector development, alongside unacknowledged tensions between EU agro-food sector export objectives and African agro-food sector development aspirations, could pose serious challenges for a renewed Africa-EU partnership in this area.  Read more “Agriculture to be a Focus of the Renewed Africa-EU Partnership”

EU West Africa Dairy Sector Developments

Summary
European dairy companies continue to expand their operations in West Africa, with the region being seen as one with tremendous market potential.  While some companies are seeking to support local dairy sector development as part of their market expansion strategies, this is by no means universal. Since 2014 low global bulk dairy commodity prices have compounded the existing challenges faced in developing local milk-to-dairy supply chains in West Africa. This suggests a need for a sector wide approach to dairy sector development involving a commitment by all EU dairy companies to responsible patterns of trade and investment, designed to support the gradual growth in local milk-to-dairy supply chains. Read more “EU West Africa Dairy Sector Developments”

EU dairy companies commit to help building milk-to dairy supply chains in Nigeria

Summary
There is a need for greater coordination between EU dairy cooperatives in their efforts to promote the development of milk-to-dairy supply chains in Nigeria. This includes in regard to the establishment of code of conduct on responsible trade and investment engagement in the Nigerian dairy sector. However the Nigerian government will also need to make sustained efforts to address infrastructural and logistical constraints on the development of competitive milk supply chains. Arla continues to grapple with the challenge of reconciling its commitment to not undermining the position of local farmers and its commercial interests linked to its core profit maximisation obligations to its farmer owners. Read more “EU dairy companies commit to help building milk-to dairy supply chains in Nigeria”